The Management Agreement

Setting the Relationship Management Policy

When a professional property management service is contracted, the managing agents will find themselves in a uniquely challenging situation. It is often said that the managing agent of the CID has many bosses, because beyond the multiple-member board, which itself produces conflicts of opinion over the direction of the property, each individual owner naturally feels that the managing agent is his or her employee. This course will cover boards, committees, and governance in depth on day two, but it is discussed here as a defining feature of the relationship management the CID managing agent performs.

Because the management agreement is the contract by which the managing agent navigates the relationship between owners, boards, and employees, management agreements should be written in clear and simple language. The benefit of a management agreement is that it lays the foundation for a cordial and lasting relationship with the CID. The management agreement is a legally binding contract that:

• Defines terms of agreement
• clearly identifies all parties and the property contracted
• identifies responsibilities relegated by Board
• fiscal
• physical
• administrative
• agent's fee (predicated on the amount of work to be done)
• states fiduciary responsibility
• clarifies to whom the managing agent reports, whether it be to one individual (e.g., the board president), or a group
• emphasizes that the managing agent acts as the agent for the entire association
• defines agent indemnification
• includes clauses that protect the management agency and the association
• acknowledges the board as fully responsible for the operation of the association
• Protects the board against gross negligence or willful misconduct by the managing agent

Managing agents of the CID can experience difficulty if the language of the management agreement is unclear regarding lines of reporting from the managing agent to the CID/Board of Directors. Without this reporting component spelled out clearly, the managing agents may find themselves engaging with each member as if each member was their full time supervisor. Thus it is essential that the management agreement clarifies to whom the managing agent reports, whether it be to one individual (e.g., the board president), or one alternate. It should also emphasize that the managing agent acts for the entire association.